In Wake of Chevron 2012 Pipe Rupture and Fire in Bay Area CSB Draft Report Proposes Overhaul of Refinery Industry Regulatory System in California and Urges Adoption of the Safety Case Regime to Prevent Major Chemical Accidents

Richmond, California, December 16, 2013 – In a draft report released to the public today, the U.S. Chemical Safety Board (CSB) proposes recommendations for substantial changes to the way refineries are regulated in California. Entitled “Regulatory Report: Chevron Richmond Refinery Pipe Rupture and Fire,” the CSB draft calls on California to replace the current patchwork of largely reactive and activity-based regulations with a more rigorous, performance-based regulatory regime – similar to those successfully adopted overseas in regions such as the United Kingdom, Norway, and Australia – known as the “safety case” system.

The draft report is the second part of three in the CSB’s investigation of the August 2012 process fire in the crude unit at the Chevron refinery in Richmond, California. That fire endangered 19 workers and sent more than 15,000 residents to the hospital for medical attention.

CSB Chairperson Dr. Rafael Moure-Eraso said, “After exhaustively analyzing the facts, the CSB investigation team found many ways that major refinery accidents like the Chevron fire could be made less likely by improving regulations. Refinery safety rules need to focus on driving down risk to the lowest practicable level, rather than completing required paperwork. Companies, workers, and communities will all benefit from a rigorous system like the safety case. I believe California could serve as a model for the nation by adopting this system. We applaud the work of the Governor’s Interagency Task Force for their proactive approach and highly positive recommendations to protect worker and public safety in California. I have great confidence that California will embrace the recommendations in our draft report and carry them forward to implement policy change.”

The draft report is available at www.csb.gov for public comment until Friday, January 3, 2014. Comments should be sent to chevroncomments@csb.gov. All comments received will be reviewed and published on the CSB website.

As detailed in the CSB draft report, the safety case regime requires companies to demonstrate to refinery industry regulators – through a written “safety case report” – how major hazards are to be controlled and risks reduced to “as low as reasonably practicable,” or ALARP. The CSB report notes that the safety case is more than a written document; rather, it represents a fundamental change by shifting the responsibility for continuous reductions in major accident risks from regulators to the company.

To ensure that a facility’s safety goals and programs are accomplished, a safety case report generated by the company is rigorously reviewed, audited, and enforced by highly trained regulatory inspectors, whose technical training and experience are on par with the personnel employed by the companies they oversee, the draft report says.

The draft report – which is expected to be considered for formal adoption by the Board at a public meeting at 6:30 p.m. on January 15, 2014, at Richmond City Hall – follows the CSB’s first, interim report on the accident, which was approved by the Board and released in April 2013. That report found that Chevron repeatedly failed over a ten-year period to apply inherently safer design principles and upgrade piping in its crude oil processing unit, which was extremely corroded and ultimately ruptured on August 6, 2012. The interim report identified missed opportunities on the part of Chevron to apply inherently safer piping design through the use of more corrosion-resistant metal alloys. The interim report also found a failure by Chevron to identify and evaluate damage mechanism hazards, which if acted upon, would likely have identified the possibility of a catastrophic sulfidation corrosion-related piping failure. There are currently no federal or state regulatory requirements to apply these important preventative measures. The investigation team concluded that enhanced regulatory oversight with greater worker involvement and public participation are needed to improve petroleum refinery safety.

The draft CSB Chevron Regulatory report released today states there is “a considerable problem with significant and deadly incidents at petroleum refineries over the last decade. In 2012 alone, the CSB tracked 125 significant process safety incidents at U.S. petroleum refineries. Seventeen of these took place in California.” The draft report also notes that the U.S. has experienced financial losses from refinery incidents that are at least three times that of industry counterparts in other countries, citing insurance industry statistics.

The existing California system of regulation can be significantly improved, the report concludes. Since 2010, the CSB has examined the extent to which a safety case regime would improve regulatory compliance and better prevent major accidents, both onshore and offshore. The safety case regime, which originated in Europe, requires highhazard facilities to demonstrate, to the satisfaction of a competent regulator, that they are able to operate safely, in conformance with the latest safety standards, and at the lowest practicable risk levels. The report illustrates that under a safety case approach, demonstrating control of major hazards is a pre-condition for a refinery to operate.

Dr. Rafael Moure-Eraso said, “In contrast to the safety case, the current regulatory system for process safety is largely reactive, at both the state and federal level; companies have a default right to operate, and are subject to penalties when accidents occur or their activities otherwise draw negative attention from regulators. In the case of the Chevron refinery fire, the reactive system of regulation simply did not work to prevent what was ultimately a preventable accident.”

Don Holmstrom, director of the CSB’s Western Regional Office, which is conducting the Chevron investigation, said, “OSHA’s Process Safety Management [PSM] standard, the EPA’s Risk Management Program, and California’s system do not work consistently to prevent industrial process accidents. What is lacking, and what the safety case regime requires, is an adaptable, rigorously inspected, goal-setting approach, aimed at continuously reducing risks to ‘as low as reasonably practicable’ – known in the industry as ALARP.”

The OSHA PSM standard is a set of requirements for facilities to identify, prevent or mitigate major chemical releases and catastrophic accidents. The current PSM standard requires companies to implement 14 elements to control the hazards from processing chemicals – such as hazard analysis, management of change, and worker training programs.

Only two of these 14 elements contain goal-based requirements – Process Hazard Analysis and Mechanical Integrity. Companies are able to comply with the other twelve elements by simply conducting highly specified activities, such as a “management of change” review. The current PSM standard does not require refineries to reduce their risks to a specific level, and companies are not required to submit their safety programs to regulators for review.

A 2007 CSB report on an explosion at a BP refinery in Texas found that only a handful of comprehensive process safety compliance inspections were occurring a thousands of refineries and chemical plants covered by the PSM standard across the U.S. Federal OSHA instituted an expanded refinery inspection National Emphasis Program following the explosion in Texas City, but that program was subsequently dropped due to lack of resources.

The CSB draft regulatory report contains an extensive analysis comparing actions required by Chevron under the OSHA PSM standard over the years and actions that would have been required had Chevron operated under a safety case regulatory regime. For example, Chevron employees recommended implementing the inherently safer approach of upgrading piping materials to prevent sulfidation corrosion through PSM activities. However, the CSB draft report found that the California process safety regulations do not require that these preventative measures be implemented. Prior to the fire, Chevron had repeatedly failed to implement the proposed recommendations; using inherently safer approaches, on the other hand, is required under the safety case. The CSB found that had Chevron implemented these recommendations, the incident could have been prevented.

Other examples in the report detail how a safety case would have required Chevron to conduct root-cause investigations, including an evaluation and incorporation of inherent safety and implementation of safety recommendations that more broadly address safety system performance. Effective implementation of the safety case requires strong workforce involvement, proactive inspections and enforcement by a well-resourced regulator, as well as incorporation of best practice performance standard requirements.

The draft report notes that promulgation of new standards by OSHA requires about seven years, and that process has made few – if any – changes to its process safety rules in more than two decades. The report contrasts this ineffectual system for updating federal safety regulations through rulemaking with the greater adaptability of the safety case regime. Under a safety case system, changing safety standards, new technologies, and findings from accident investigations are required to be incorporated by facilities. “In the last decade,” the draft report states, “the CSB has made a number of process-safety related recommendations to OSHA and the EPA in its investigation reports and studies (e.g. Motiva, BP Texas City, and Reactive Hazards). However, none of these important regulatory recommendations have been implemented, and there have been no substantive changes made to the PSM or RMP regulations to improve the prevention of major accidents.”

In contrast, regulators in countries such as the UK and Norway are able to more quickly implement appropriate safety improvements. Available studies summarized in the report illustrate that the safety case continues to be effective. For example, data from Norway and the UK show a reduction in hydrocarbon releases offshore under the safety case regime. The draft report concludes that “Independent studies of the safety case in the UK have identified improvements to safety performance from the safety case regulatory regime and support of the safety case by major oil companies.”

Chairperson Moure-Eraso said, “The safety case is being increasingly adopted around the world, and the U.S. safety system has fallen behind. Workers, the public and the industry itself would benefit greatly from the enhanced advantages of this more adaptable and effective approach to regulation. Other regimes have long since recognized the need for increased participation by workers and their representatives, transparency of information and the use of key process safety indicators to ensure the system works to prevent major accidents.”

Subject to a vote by the board, the draft report would recommend that California “Develop and implement a step-by-step plan to establish a more rigorous safety management regulatory framework for petroleum refineries in the state of California based on the principles of the ‘safety case’ framework in use in regulatory regimes such as those in the UK, Australia, and Norway.” The recommendation urges specific steps to accomplish this, including ensuring that workers are formally involved in thedevelopment of a safety case approach. The report also urges California to work with industry in gathering refinery safety indicator data to be shared with the public.

CSB Investigator Amanda Johnson said, “We believe our draft report provides a definitive examination of the advantages of the safety case system, one that would not only benefit California but the U.S. as well.”

Ms. Johnson continued, “We have reviewed the literature, studied systems in place overseas, and held hearings to gather data and opinions. Some critics of the system fear it would lead to ‘self regulation’ by the industry; however, the safety case regime requires highly qualified regulators, whose technical abilities and experience match those of the technical staff at refineries. And it provides the regulator with the authority to accept or reject the safety case report to ensure that the employer has demonstrated that effective safeguards are in place.”

The CSB is an independent federal agency charged with investigating serious chemical accidents. The agency's board members are appointed by the president and confirmed by the Senate. CSB investigations look into all aspects of chemical accidents, including physical causes such as equipment failure as well as inadequacies in regulations, industry standards, and safety management systems.

The Board does not issue citations or fines but does make safety recommendations to plants, industry organizations, labor groups, and regulatory agencies such as OSHA and EPA. Visit our website, www.csb.gov.

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